Health Insurance for Working Parents: A Fairy Tale

Once upon a time in America, there was a young dad who toiled each day assembling automobiles at a local factory. It was hard work, but it provided him with ample treasures: enough money to put food on the table, pay his mortgage, and make sure that his wife and three children had excellent medical coverage

Today, that man's daughter also works long hours as an office manager for a local auto-repair business. But the insurance provided by her employer does not cover her two young children or husband, a self-employed carpenter. What's more, the couple's combined annual income of $40,000 is too high for her children to qualify for publicly-funded health care programs like Medicaid or the State Children's Health Insurance Program (SCHIP). The couple's only option is to buy extremely expensive private insurance. Given their mounting expenses, the couple has decided to forgo health insurance altogether, keeping their fingers crossed that the family stays healthy.

The simple fact is that many employers today don't offer employees and their families health insurance coverage, and even if they do, it is often too expensive for many to afford. A recent study by the employee benefits company Hewitt Associates found that a growing number of employers are trying to limit their dependent care costs by increasing the amount employees need to pay to cover a spouse and children or by getting rid of dependent coverage altogether. What's more, according to the 2003 Current Population Survey, the percentage of children receiving dependent coverage fell from 66% in 2000 to 61% in 2003. This means that 2 million fewer children are receiving health coverage through their parents' employers, a drop that is increasingly due to small businesses opting not to offer coverage.

In the richest nation in the world, how is it that 45 million Americans -- two thirds or whom are working -- are uninsured?

To understand how we got here, start with your history book. Our voluntary, employer-based health care system was born during World War II when, faced with wage caps, employers began offering health insurance benefits to employees and their dependents as a way to increase compensation and attract and retain quality workers. This system made sense in the 1930's and 40's when most workers had full-time jobs that they stayed with for many years, supporting themselves and their families, usually a stay-at-home wife and children.

But today's workforce looks very different. Millions of people are "nonstandard" workers -- part-time, low-wage, or temporary employees. These jobs are much less likely to offer benefits like health insurance coverage. Why? Because they often require unskilled labor and have high turnover. Even those part-time jobs requiring greater skill increasingly go to moms who are giving up health benefits for flexible work schedules and more time to care for their children. Employers aren't as concerned with instilling loyalty in this segment of their workforce and, even if they were, it is much too expensive to offer all these employees coverage.

In fact, cost is one of the single biggest reasons that employer-sponsored coverage has eroded. Expensive medical technology, prescription drugs and malpractice premiums have contributed to a double-digit rise in health insurance costs during each of the past five years. Unlike other items in their budgets, such as wages, employers have no control over increases in their health insurance premiums, making their costs unpredictable.

Faced with incalculable, skyrocketing increases, it's no surprise that employers are cutting back, pushing more of the cost of health insurance onto their employees or deciding not to offer health benefits at all.

What can we do to fix our health care system so that all Americans have access to affordable, quality health care? One solution is to make health insurance citizen-based instead of job-based. Health insurance should be a benefit offered to all Americans, not just those whose employers decide to provide it. In a citizen-based system, health insurance would follow the individual rather than the job, so people would no longer have to worry that losing a job means losing insurance. Parents who want to take time off to care for a child or cut back on their hours to spend more time with their families could do so without putting their families' health care at risk.

Another solution is to make health insurance, like car insurance, mandatory. How would this help? If all of us were required to have insurance, the nearly 19 million 18-35 year-olds, who either can't afford to buy insurance or are gambling that they'll stay healthy, would be brought into the pool. Bringing this relatively young and healthy population into the insurance market would spread risk more evenly, lowering costs for everyone.

A critical part of the solution is to strengthen our public health insurance programs -- Medicaid and SCHIP -- to cover all uninsured children. Many of today's more than 8 million uninsured children are already eligible for these programs, but their parents often face difficult barriers getting them enrolled and keeping them covered. Finally, there are those children who are caught in the middle -- their family's income is too low to afford private insurance and too high to allow them access to public insurance.

The prospect of a government takeover of the health insurance industry has stymied any attempt to reform our broken system. But much of the rhetoric we hear is simply fear-mongering. There are practical solutions that don't involve big government. And these solutions are not only feasible, they are necessary. Health care costs don't appear to be decreasing any time soon, and the number of working Americans without insurance continues to climb. It's a problem that is unlikely to go away unless those most effected by the problem, including the growing numbers of uninsured working parents, demand change.